UNIVERSITY OF DHAKA

Individual Assignment

SUBMITTED TO
Dr. Shams Uddin Ahmed
Professor
Department of Banking & Insurance
University of Dhaka
Course Title: Comparative Tax System
Course Code: MTM - 605

Submitted by
Sharmin Sultana
COMPARISON OF TAX ID: 52064005
Batch: 6th
SYSTEM BETWEEN Submission date: 23/08/2020
PEOPLE’S REPUBLIC OF BANGLADESH
& PEOPLE’S REPUBLIC OF CHINA
 Taxation is the most important source in nearly all countries. According to the most recent
estimates from the International Centre for Tax and Development, total tax revenues account
for more than 80% of total government revenue in about half of the countries in the world –
and more than 50% in almost every country.

Taxation patterns around the world today reveal large cross-country differences. Here we
have chosen 2 countries from two different tax family - Bangladesh and China to compare
their tax system.

Bangladesh
Individual/Personal Tax
Income Tax Ordinance. 1984
Bangladesh consider Financial Year as
Tax year. For example, July 2020-2021
An individual is resident for tax purposes
if he/she is present in Bangladesh more
than 182days in the income year or if
during the preceding 4 years he/she was
present in Bangladesh for at least
365days and during the income year
he/she present in Bangladesh for at least
90days.
National Board of Revenue (NBR),
Bangladesh
There are 7 head of income –
1. Salaries.
2. Interest on securities.
3. Income from house property.
4. Agricultural income.
5. Income from business or profession.
6. Capital gains.
7. Income from other sources.
VS China
I) Income Tax Individual Income Tax (IIT) Law of
Act the People's Republic of China
(Adopted at the 3rd session of 5th
National People's Congress on
September 10, 1980)
II) Income China consider Calender Year as
year income year. For example, January
2020-December 2020.
III)Residency Individuals who have domicile in
Rules China, or who have no domicile but
have resided in China for at least 183
days or more within a calendar year,
are classified as resident taxpayers
and after six years of holding tax
resident status, tax residents will be
subject to paying individual income
tax on their worldwide income.
IV) Tax State Taxation Administration (STA),
collection China
Authority
V) Head of There are 11 head of income –
Income
1. Income from wages, salaries;
2. Income from production, operation
derived by industrial and commercial
households;
3. Income from contractual or leasing
operations to enterprises or
institutions;
4. Income from labor service
payment;
5. Income from authors remuneration;

6. Income from royalties;

Page 1 of 11
 7. Income from interest, dividends
and extra dividends;
8. Income from lease of property;
9. Income from transfer of properly;
10. Contingent income;
11.Other income specified as taxable
by the finance department of the State
Council.
If total income exceeds tk 3,00,000 for a VI) Taxable Whatever the amount an individual
male, tk 3,50,000 for a female and 65 or income earn in a year will be taxable income.
above aged person, tk 4,50,000 for a
disabled person and tk. 4,75,000 for
wounded gazette freedom fighters then it
will be taxable income.
Personal income tax rates are progressive VII)Tax Rate Personal income tax rates are
rate from 5% to 25% progressive from 3% to 45% for both
resident and nonresidents tax payer.
Amount of Taxable Income Rate Based on income head the tax rate as
First Tk. 300,000 or as applicable Nil well as taxable income amount and
Next BDT 100,000 5% allowable deduction amount varies.
Next BDT 300,000 10 %
Next BDT 400,000 15 % 1. Rate for comprehensive income
Next BDT 500,000 20 % (includes wages and salaries, labor
On the remaining balance 25 % remuneration, author remuneration
and royalties) is given bellow –
nonresidents are taxed at a flat rate of
30%. (All amount in RMB)
Annual Taxable Income Rate Deduction
0 – 36,000 3% 0
36,001 – 144,000 10 % 2,520
144,001 – 300,000 20 % 16,920
300,001 – 420,000 25 % 31,920
420,001 – 660,000 30 % 52,920
660,001 – 960,000 35 % 85,920
Over 960,000 45 % 181,920

2. Income from business operation

(includes privately-owned businesses,
sole proprietorship enterprises, or
partnerships) is generally subject to
IIT at progressive rates from 5% to
35%, as follows:

Annual Taxable Income Rate

0 – 30,000 5%
30,001 – 90,000 10 %
90,001 – 300,000 20 %
300,001 – 500,000 25 %
Over 500,000 30 %

Page 2 of 11

Income from following categories of
income is exempted from individual
income tax –
1. House Rent allowance : 50% of basic
salary or monthly 25,000 tk. Which is
lower.
2. Conveyance allowance : yearly
allowable expenses tk. 30,000
3. Medical expenses : 10% of basic
salary or yearly 120,000 or actual
medical expenses which is lower.
4. Tax free income on dividend up to
Tk. 50,000.
5. Pension fund payments previously
exempt from tax is now conditional
on fund being government fund or
funds approved by NBR.
6. Gratuity payments is still tax
exempt up to Tk. Two crore Fifty lac
provided the fund is approved by
NBR or received from any
government fund.
7. WPPF has also tax exempted up to
Tk. 50,000. If any person get above
50,000 he is liable to pay tax from
rest of amount.
8. Rental income – 60% of total rental
income.
Resident and non-resident
Bangladeshi get rebate on investment
from total tax liability through investing
3. Income from other sources : A
flat rate of 20% is applied on the
remaining categories of income,
including incidental income, rental
income, interest income, dividends,
and capital gains, unless specifically
reduced by the State Council.
VIII)Tax 1. For comprehensive income only the
Exemption following expenses is allowed to
deduct from taxable income –
a) Child Education
b) Continuing education
c) Major medical expense
d) Mortgage interest and rental
expense
e) Elderly care
2. Individual who have only earning
from business operation but no
comprehensive income, a monthly
deduction of RMB 5,000/ or annual of
RMB60,000 is generally applicable
per individual’s net income derived
from the business.
3. For income from personal services,
manuscript and royalty income a
deduction of 20% of the payment is
allowed to deduct.
4. The deduction of rental income is
as follows –
a) If the amount received in a single
payment in not more than RMB 4,000
a standard deduction of RMB 800 is
allowed.
b) If the amount received from a
single payment exceeds RMB 4,000 a
deduction equal to 20% of the
payment is allowed.
of IX)Tax There is no Tax incentives for
incentives individual tax payment.
Page 3 of 11
in government specified area.

Amount of investment tax credit is 25%

of total taxable income or actual
investment or BDT 15,000,000
whichever is lower.
Advance payment of tax is now X)Withholding Employers should withhold individual
required for assesse with income above Tax income tax from resident individual
Tk. 6 lac increased from the previous rate employment income and pay to the
of Tk. 4 lac. tax authorities with a “cumulative
withholding method” on a monthly
Instalments of advance tax - Advance basis. If the annual cumulative tax
tax shall be payable in four equal amount withheld and the final tax
installments on the fifteenth day of payable amount are inconsistent,
September, December, March and June resident individual should perform
of the financial year for which the tax is annual IIT reconciliation filing with
payable: the in-charge tax authorities from 1st
March to 30th June in the following
year.
Any person required to have 12-digit e- XI)Tax Monthly individual income tax
TIN will have to file tax returns even if returns and returns are due by the 15th of the
the person does not have taxable income. compliance following month and annual
individual income tax returns should
Annual individual income tax returns be performed between 1st March and
st
should be performed between 1 July to 30th June of the following year if
30th November of the following year as certain conditions are met as their Tax
the Tax year ends on 30th June. The filing year ends on 31 December.
date may be extended up to 2 months by
the Deputy Commissioner of Taxes upon
application by an individual being
assessed, and by another 2 months upon
application by the Inspecting Joint
Commissioner of Taxes.
Penalties are imposed for late filing, XII)Penalty In China, penalties for non-payment
failure to file a return or failure to pay for non- varies case to case and it can amount
tax, concealment of income, failure to compliance to 5 times the unpaid tax. If the tax
maintain proper records and failure to payer is caught by the authorities he is
provide required documents or data. required to pay his tax as well as civil
Imposition of penalty are mentioned to and criminal penalties, but if the
chapter XV, section 137 of chapter XVI person voluntarily disclose his past
of ITO,1984. noncompliance and file tax returns for
previous years and pay the required
taxes Chinese tax authorities reduce
the penalties for them.
Corporate Income Tax
Entities other than banks, insurance I) Income year The income year commences on 1st
companies or financial institution, the tax January and ends on 31st December
year commences on 1st July and ends on

Page 4 of 11
30th June.
Deputy Commissioner of Taxes(DCT)
may allow a different financial year for
an entity which parent company
incorporated outside Bangladesh.
Basis of Taxation is on Tax Statutes, Tax
Rules & S.R.O. NBR’s Circulars, Orders,
Verdicts of the High Court Division and
the Appellate Division of the Supreme
Court.
Bangladeshi resident and non-resident
corporations are subject to tax on their
taxable income.
A company is considered resident for tax
purposes in Bangladesh if its control and
management of the company is situated
wholly in Bangladesh in that year.
Corporate income tax varies depend on
the category -
Listed Companies-25%
Non-listed Companies-35% Bank,
Insurance & Financial Institutions:
Listed Institutions-37.5%
Non-listed Institutions -40% Government
Approved Bank, Insurance & Financial
Institutions in 2013 -37.5%
Merchant Bank-37.5%
Tobacco Produced
Companies-45%
Mobile Phone Operator companies-45%
II) Tax basis Tax resident enterprises (TREs) are
subject to corporate income tax (CIT)
on their worldwide income. A non-
TRE that has no establishment or
place in China is taxed only on its
China-source income. A non-TRE
with an establishment or place in
China shall pay CIT on income
derived by such establishment or
place from sources in China as well as
income derived from outside China
that effectively is connected with such
establishment or place.
III) Residency A company is resident in china if it is
established in China or if its place of
effective management is in China.
Effective management is defined as
substantial and overall management
and control over manufacturing and
business operations, human resources
and financial and property aspects of
the entity.
IV)Tax Rate Corporate Income Tax (CIT) is levied
on company profits at a rate of 25%.
There used to be separate rates in
place for domestic and foreign
companies, but these were equalized
as part of reforms to Corporate
Income Tax Law in 2008.
A lower CIT rate is available for the
following sectors/industries:
1. Qualified new/high tech enterprises
are eligible for a reduced CIT rate of
15%.
2. Key software production
enterprises and integrated circuits (IC)
design enterprises are eligible for a
reduced CIT rate of 10%
3. Qualified technology-advanced
service enterprises are eligible for a
Page 5 of 11

Taxable income is the net of total taxable
income less total deductible expense and
carried forward tax loss.
Generally income includes –
1. Income from business operation
2. Income from capital gain
3. Income from foreign exchange
4. Income from other sources
All expenses relating to the business
operations of a company and incurred
during the relevant income year are
allowed as deduction.
reduced CIT rate of 15%.
4. From 1 January 2014 to 31
December 2020, enterprises
established in the Qianhai Shenzhen-
Hong Kong Modern Services Industry
Cooperation Zone and Pingtan
Comprehensive Experimental Zone
are eligible for a reduced CIT rate of
15%, provided that the enterprise is
engaged in projects that fall within the
Catalogue for CIT Preferential
Treatments of the zone.
5. From 1 January 2019 to 31
December 2021, qualified small and
thin-profit enterprises with an annual
taxable income of 1 million yuan
renminbi (CNY) or less are applicable
to the effective CIT rate of 5%.
Where their annual taxable income
exceeds CNY 1 million but does not
exceed CNY 3 million (inclusive),
the CNY 1 million portion will be
subject to an effective CIT rate of 5%,
whereas the excess portion will be
subject to the effective CIT rate of
10%.
6. Qualified enterprises engaged in
pollution prevention and control are
eligible for a reduced preferential CIT
rate of 15% from 1 January 2019 to
31 December 2021.
V)Taxable Taxable income is the amount
Income remaining from gross income in a tax
year after deducting allowable
expenses and losses, nontaxable and
tax-exempt items and any prior year
loss carryforwards. All documented
costs incurred in connection with
operating activities in a reasonable
and actual basis are allowable, except
those specifically identified as
nondeductible.
VI)Allowable CIT is calculated based on total
deduction income less allowable deductions.
Deductions allowable for CIT
Page 6 of 11

1. Tax depreciation on fixed assets of the
company (except land is allowed at
prescribed rates as per third schedule.
2. The cost of free samples and
entertainment expenses are allowed as
deductions at prescribed rates based on
turnover and profit respectively or the
actual amounts, whichever are lower.
3. Provision for bad debts is not allowed.
4. Specific provisions for accrued
expenses in the relevant income year are
allowed as deductions.
Withholding tax is an income tax to be VII)
paid to the government by the payer of Withholding
the income rather than by the recipient of Tax
the income. Income subject to deduction
at source and withholding tax rates are
mentioned to chapter VII and section 48
to 56 of Income Tax Ordinance 1984.
Capital gains from transfer of stocks and VIII) Capital
shares of public limited companies listed Gain Tax
with stock exchange except listed Govt.
securities tax rate are-
1. Resident companies and firms – 10%
2. Non-resident shareholders – 15%
3.Sponsor shareholders and shareholder
Page 7 of 11
generally include:
1. Business costs and expenses
incurred in relation to income
received
2. Appropriate other taxes and losses
3. Charitable donations (up to 12%
limit)
4. Depreciation of fixed assets
5. Amortization of intangible assets
6. Any reductions based on local tax
incentives.
Withholding Tax (WT) applies to
payments of China derived income to
non-resident enterprises. For such
payments, a tax must be “withheld”
before remittance. The current rate of
withholding tax is 10%, but note that
this is a general reduction from a
higher rate of 20%, and could change
in the future.
This would apply to the following:
1. Dividends or other equity
investment proceeds from a China
source
2. Interest, Royalties, and rent
For certain countries, there are double
taxation treaties in place to offset
some of this tax paid. These treaties
may specify a rate lower than 10% to
be used, in which case this can be
adopted. For further details on double
taxation treaties, see our separate
article.
China does not have a specific Capital
Gains Tax policy. Any capital gains
are treated as normal company
income and therefore taxed as part of
CIT.
directors – 5%
4. Resident individual holding at least
10% of the total share capital of the
company – 5%
Capital gain from transfer of Assets will
be separated from total income and tax at
15%.
A company paying dividend shall
withhold tax on dividend payable –
Non-resident individual – 30%
Resident individual with TIN – 10%
Resident individual without TIN – 15%
Company – 10%
Under section 48(2) of Income Tax
Ordinance, 1984 any sum deducted or
collected or paid by way of advance
payment in accordance with the
provisions of chapter VII, shall for the
purpose of computing the income of an
assesse, be deemed to be the income
received and be treated as payment of tax
in due time by the assesse. Advance tax
shall be payable in four equal
installments on the fifteenth day of
September, December, March and June
of the financial year for which the tax is
payable.
Penalties are imposed for late filing,
failure to file a return or failure to pay
tax, concealment of income, failure to
maintain proper records and failure to
provide required documents or data.
Imposition of penalty are mentioned to
chapter XV, section 137 of chapter XVI
of ITO,1984.
Tax losses can be carried forward for a
maximum period of 6 years. Foreign
sourced losses of a Bangladesh entity
cannot be offset against the Bangladesh
profits of that entity.
Tax Incentives are available for certain XIII) Tax
income, such as income from an incentives
infrastructure
IX) Taxation An exemption applies for dividend
of dividends paid by a resident company to another
resident company. Dividends received
from a foreign entity are included in
taxable income and subject to income
tax at a rate of 25%.
X) Tax Tax is calculated and paid monthly or
payment quarterly (within 15 days of the
period end), and then reconciled
annually as part of a company’s year-
end audit. Additional tax is paid or a
rebate applied for as appropriate at
this time.
XI) Penalties A late payment surcharge will be
imposed daily at a rate of 0.05% of
the amount of underpaid tax. Penalties
may be imposed in addition to the late
payment surcharge. An interest-based
penalty calculated at the basic RMB
lending rate plus 5% applies where
tax adjustment have been made based
on china’s transfer pricing, thin
capitalization, controlled foreign
company and general anti –avoidance
rules.
XII) Losses Losses may be carried forward for
carry forward five years, which may be extended to
10 years for qualifying new/high
technology enterprises and small and
medium – sized technology
enterprises.
Enterprises purchasing and using
equipment specified by the state for
environmental protection, energy and
Page 8 of 11
 facility set up in Bangladesh, the
business of information technology
enabled services, exports of handicrafts
and industries established in an export
promotion zone provided certain
requirements are met, Area based tax
incentive are available to industrial
undertakings set up in specified regions.
water conservation, or production
safety purposes are eligible for a tax
credit of 10% of the investment in
such equipment. Any unutilized
amount can be carried forward and
creditable in the following five years
There are also tax incentives in
relation to the deduction of expenses
and cost (e.g. 75% additional R&D
deduction, shorter tax depreciation
period, and accelerated depreciation).

Though each and every country impose tax on Individual and corporate income but still there
are some difference exist that we have shown above by comparing the tax system between
Bangladesh & China.

Page 9 of 11